Chicago Close
29/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.54 1/4, down 13 1/2 cents; Nov 11 Soybeans closed at USD13.57 1/4, down 14 1/4 cents; Aug 11 Soybean Meal closed at USD351.60, down USD3.70; Aug 11 Soybean Oil closed at 55.65, down 11 points. On the week Nov beans were down 41 cents. US weather forecasts are looking far less threatening than they did a week or so ago prompting funds to sell an estimated further 5,000 soybean contracts on the day. The US debt ceiling negotiations drag on and it's all starting to look rather disconcerting. The longer this takes to sort out the more questionable it seems that the US can muster any kind of bipartisan support for dealing with the deficit issue.
Corn: Sep 11 Corn closed at USD6.65 1/2, down 16 3/4 cents; Dec 11 Corn closed at USD6.68 3/4, down 17 1/2 cents. On the week Sep corn was down 24 1/2 cents and Dec fell 16 3/4 cents. Funds were said to have dumped 14,000 contacts on the day as weather forecasts turned more benign. As with beans the US debt ceiling issue is keeping the market very nervous. Confidence was running quite high that something may be resolved be tonight, but that is now starting to look less likely. If, and this seemed like a very large if a week or two ago, but if there is no consensus then exactly how the market will react to a US default is very uncertain.
Wheat: Sep 11 CBOT Wheat closed at USD6.72 1/2, down 20 3/4 cents; Sep 11 KCBT Wheat closed at USD7.67, down 16 1/2 cents; Sep 11 MGEX Wheat closed at USD8.30 3/4, down 16 cents. CBOT wheat was down 19 3/4 cents on the week. US spring wheat potential is declining, but export competitiveness is also. The bullish story relating to US wheat also seems to be losing influence in international circles. Egypt bought 240,000 MT of Russian wheat again today, their fourth clean sweep in succession since the turn of the month. Funds sold an estimated 5,000 CBOT contracts today.
EU Grains Close
29/07/11 -- EU grains finished with Nov London wheat down GBP1.35/tonne to GBP163.65/tonne and Nov Paris wheat EUR2.25/tonne lower at EUR197.75/tonne.
On the week overall wheat managed to post modest gains with Nov in London up GBP2.65/tonne and it's Paris counterpart up EUR4.75/tonne.
Egypt bought 240,000 MT of Russian wheat in it's tender today making that four clean sweeps in a row amounting to 660,000 MT since the lifting of the Russian export embargo at the turn of the month.
Today's purchases were made at around USD255.00/tonne FOB plus freight in the region of USD16.00/tonne. That's still a hefty saving on US and French wheat, although it's up USD10.00/tonne from the prices submitted by the Russians at the beginning of the month.
The stalled French harvest should regain some momentum over the weekend.
At home some very early wheat harvesting has been reported in East Anglia with Cordiale in coming in with proteins of 12.5-13.0, good hagbergs and excellent bushel weights in excess of 80kg/hl, according to my chums at Dalmark.
Rapeseed yields in the UK so far are widely reported as being very impressive with a final output of a record in the region of 2.5 MMT looking likely.
The Week So Far
29/07/11 -- Here's a quick resumé of where we are on the week so far, including overnight/daytime action this morning:
Nov London wheat up GBP3.00; Nov Paris wheat up EUR5.50; Nov CBOT soybeans down 20 1/2c; Dec CBOT corn down 3 3/4c; Dec CBOT wheat up 43 1/4c.
An interesting point raised by Agrimoney.com this morning is front month September corn closing below new crop December for the first time in almost a year.
It's also noteworthy that Chicago wheat has outperformed everything else this week, clearly on the back of wheat conditions in the US. That market seems to be trying to ignore increased wheat production estimates elsewhere and the ultra-competitive offers emanating out of the Black Sea.
There may be some quality issues surrounding quality amongst French and German wheat when the harvest gets going again this weekend after a week of rain. There are also quality question marks over Ukraine's wheat crop.
That makes it particularly difficult to make out a case for why UK feed wheat prices should mirror the movements of better quality wheats traded in Paris and the US.
Once again I can only attribute this to lack of selling by growers here itching to get stuck into their wheat faced with whatever uncertainty remains over quality and yield. It may therefore be a few weeks yet before we see any "harvest pressure" on UK wheat prices.
The Morning Vibe
29/07/11 -- Harold Wilson famously once said that "24 hours is a long time in politics" (along with "I'll have a quarter of rough shag please"). So we awake this morning full of anticipation to see what has happened with the US debt ceiling issue only to discover that the answer is nothing at all.
Last night's Republican vote was postponed it would seem as House Speaker John Boehner realised that he still didn't have enough support to push his budget deficit-cutting plan through.
So where are we now? Facing another long 24 hour wait for something to happen by the looks of it. Yet the markets seem strangely calm and relaxed about the whole thing as Tuesday's deadline approaches.
Elsewhere the slowest car crash in history rumbles on, Moody's have said that Spain is facing a possible credit rating downgrade, and suggest that the latest Greek bailout hasn't really changed things.
I have to say that I'm surprised by the grain market's ability to largely shrug off these negative vibes, especially in the light of a plethora of "nowhere near as bad as we feared" reports coming in for all over the place now that the harvest is well underway across the northern hemisphere.
Egypt are back to feed at the trough today, looking for an unspecified quantity of wheat. The main point of interest there will be how much cheaper than everybody else Russian grain is likely to be this time round.
Ukraine has harvested 28.1 MMT of grains so far with yields up 22%, according to the Ministry.
August Paris rapeseed goes off the board today.
Chicago Close
28/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.67 3/4, down 8 cents; Nov 11 Soybeans closed at USD13.71 1/2, down 9 cents; Aug 11 Soybean Meal closed at USD355.30, down USD0.50; Aug 11 Soybean Oil closed at 55.76, down 64 points. The weather seems less threatening than last week and weekly export sales were disappointing at at 372,700 MT versus the 550 to 850 TMT expected. "The Midwest rainfall in the past week has been heavy in the Northern Midwest with a weakening dome of high pressure. Over 4 inches of rain has occurred in eastern Iowa, northern Illinois and Ohio, giving corn and soybeans a needed boost," say Martell Crop Projections. The June US soybean crush came in at 124.3 million bushels 0.8 million lower than expected. Funds were given credit for selling around 6,000 contracts on the day.
Corn: Sep 11 Corn closed at USD6.82 1/4, down 9 1/4 cents; Dec 11 Corn closed at USD6.86 1/4, down 5 1/4 cents. As with beans the weather has improved and the weekly corn export sales total was also a let down at 484,500 MT compared to the 550 to 950 TMT expected. "A rash of strong thunderstorms developed again last night in Nebraska, southern Wisconsin and Michigan. It is the best rainfall in several weeks and highly beneficial for corn that is pollinating and setting kernels," say Martell Crop Projections. Further south Tropical storm Don could bring heavy welcome rain for Louisiana and Mississippi in the next day or two before pushing northwards into Alabama, Georgia and the Carolinas Sunday through to Tuesday, they add.
Wheat: Sep 11 CBOT Wheat closed at USD6.93 1/4, down 11 1/2 cents; Sep 11 KCBT Wheat closed at USD7.83 1/2, down 4 3/4 cents; Sep 11 MGEX Wheat closed at USD8.46 3/4, down 4 1/4 cents. The Wheat Quality Council crop tour continues to report lower yield prospects i North Dakota and weekly export sales of 473,800 MT were at the high end of expectations for sales of 300 to 500 TMT. Elsewhere in the world though the news was bearish with the International Grains Council increasing their global wheat crop estimate by 8 MMT, and adding 5 MMT to the 2011/12 ending stocks. Jordan bought 50,000 MT of what was almost certainly Black Sea wheat overnight. Egypt are to tender again for an unspecified volume of wheat on Friday, as with recent tenders US wheat is not expected to feature if price alone is the only consideration.
WeatherWatch
28/07/11 -- Here's the UK weather forecast for the week ahead from the extremely useful Weather Schools Channel on YouTube. Get the harvest in if you can before next Wednesday I think is the clear message here.
EU Grains Close
28/07/11 -- EU grains finished higher with Nov London wheat up GBP1.50/tonne to GBP165.00/tonne and with May climbing GBP1.85/tonne to GBP172.10/tonne. Nov Paris wheat was up EU4.25/tonne to EUR200.25/tonne whilst May12 rose EUR4.50/tonne to EUR206.00/tonne.
Selling interest was light as producers busy themselves with harvesting, determined not to oversell and in many cases still unsure of the final quality of their grain until it's in the barn.
Apart from those reasons they're weren't too many other bullish stories out there today.
The International Grains Council raised their global wheat production estimate by 8 MMT to 674 MMT and increased their ending stocks estimate by 5 MMT to 190 MMT - only 8 MMT below the "we've got so much wheat we can't give it away" year of 2008/09.
Ukraine hiked their grain harvest estimate to 51 MMT, 30% up on last year, saying that this season's corn crop could hit the 18 MMT mark which is 2.5 MMT more than the USDA currently project.
Romania says that it has harvested 5.8 MMT of wheat so far this year and that the final total could be 6.7 MMT - a million tonnes, or 18%, up on last year.
Meanwhile the EU’s Monitoring Agricultural Resources unit (MARS) pegs the EU-27 wheat crop only down marginally on last season at a fraction over 137 MMT, and sees barley production a million tonnes up on last year at 54.15 MMT. Corn output is forecast at 61.21 MMT. All three combined adds almost 10 MMT of grain to the EU's bottom line this year compared to current USDA projections.
Brussels granted 382,000 MT of EU soft wheat export licences this past week, taking the marketing year to date total to 977,000 MT - a fair total four weeks into the season and slightly higher than where we were this time twelve months ago.
However we've imported almost three times that volume, 2.8 MMT, during the same period whereas twelve months ago that figure was just 365,000 MT.
A revised bill to raise the US debt ceiling goes for a vote at the House of Representatives later tonight. Which means tomorrow could be interesting.
Early Call On Chicago
28/07/11 -- The overnight grains finished mixed with wheat 5-7c higher, beans narrowly either side and corn 1-3c easier.
The USDA's weekly export sales came in with wheat sales of 473,800 MT for wheat (at the high end of expectations of 300 to 500 TMT), corn sales of 484,500 MT (below the 550 to 950 TMT expected) and soybean sales at 372,700 MT (550 to 850 TMT expected).
Nothing too exceptional amongst that lot really, although China showed up buying one cargo of wheat.
The International Grains Council have upped their 2011/12 world wheat production forecast by 8 MMT to 674 MMT and increased their ending stocks estimate by 5 MMT to 190 MMT. Corn production is up 1 MMT and carryover up 2 MMT.
Separately the Ukraine said that they'd end up with a 51 MMT grain harvest this year, a 30% rebound from last season and the highest estimate we've seen yet.
Elsewhere MARS say that the EU wheat harvest will be barely changed at 137 MMT this year, when most private estimates were around 130-132 MMT a month or two ago.
Yet despite all these extra tonnages coming out of the woodwork the market appears to want to try pushing higher this afternoon with London wheat up GBP2-3/tonne and Paris wheat up EUR4-5/tonne.
The June US soybean crush came in at 124.3 million bushels 0.8 million lower than expected, and rain moving across the Midwest today/tomorrow will be welcomed.
The USDA confirm the sale of 170,000 MT of corn to Japan.
Overall there seems to be more bearish than bullish news in amongst that lot, and that's besides the US debt ceiling problem still up in the air, yet early calls don't exactly see the market falling out of bed:
Wheat up 4-6c, corn down 3-4c, beans flat to 2c lower.
